The WiseTech Global Ltd (ASX: WTC) share price has been a quiet performer on the ASX boards over the past week. Since the start of July, WiseTech shares are up nearly 15% to $22.15 at the time of writing. We’re not yet back to the pre-market crash levels of ~$30 per share, but this global logistical solutions company is still up more than 110% from the lows we saw in March.
Why is the WiseTech share price climbing?
There hasn’t been any major news out of the company in July so far, so it’s not entirely clear why the WiseTech share price is so decisively in investors’ good books right now. The company did announce last Friday that around 21,000 shares were being released from escrow as a result of a recent acquisition. But this event was more likely to create selling pressure than buying pressure, if anything.
I think these moves are just the market ‘getting over’ the fact that WiseTech CEO Richard White recently offloaded around 2.5 million shares (worth around $46 million). The market generally hates insider selling — especially from founders. And $46 million isn’t an insignificant pile of chips to take off the table (although it pales against some other recent instances of insider selling). When Mr White’s sale was announced, WiseTech shares fell more than 6%. But the increases over the last week mean the Wisetech share price has now recovered from that news and then some.
Are WiseTech shares a buy today?
WiseTech is a good company in my view. I think it’s really found a winner with its CargoWise software solutions. I also think the company has a promising growth runway ahead if it can keep making smart acquisitions. What’s more, WiseTech shares remain significantly below the sky-high prices they were trading at last year. At one point in September, the WiseTech share price reached as high as $38.80.
But that in itself doesn’t mean today’s share price of $22.15 is automatically a bargain, of course. Even at the current valuation, I still have some concerns. WiseTech’s current price-to-earnings (P/E) ratio is still sitting at 77.04 – a long way from the current S&P/ASX 200 Index (ASX: XJO) average of ~17. It also has a price-to-sales (P/S) ratio of more than 16, which I would regard as extremely high.
I accept that WiseTech’s business model can distort these conventional valuation metrics somewhat. But I’m still not convinced there is much value in the WiseTech share price right now. As such, I think there are better growth opportunities out there and I’ll be sitting on the sidelines for this one.
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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of WiseTech Global. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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